COURT FILE NO.: CV-19-616000
DATE: 20210205
ONTARIO SUPERIOR COURT OF JUSTICE
RE: THERALASE TECHNOLOGIES INC. et al., Plaintiffs
-and-
LANTER et al., Defendants
BEFORE: F.L. Myers J.
COUNSEL: Simon Morris for the defendant Matthew Singer Fraser Dickson, for the plaintiffs
HEARD: February 3, 2021
ENDORSEMENT
The Motion
[1] Mr. Singer moves to set aside the default judgment granted against him on January 13, 2020.
[2] The parties agree on the applicable test as set out by the Court of Appeal in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194:
[48] The court must consider the following three factors:
(a) whether the motion was brought promptly after the defendant learned of the default judgment;
(b) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules; and
(c) whether the facts establish that the defendant has an arguable defence on the merits.
[49] To this list, I would add the following two factors the court should have regard to, as set out in Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. 2007 ONCA 333, 87 O.R. (3d) 479 (C.A.), at para. 2:
(d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and
(e) the effect of any order the court might make on the overall integrity of the administration of justice.
[3] For the reasons that follow, I find that the motion must be dismissed.
The Default Judgment
[4] In my decision dated January 13, 2020, reported at 2020 ONSC 205, I granted default judgment against Mr. Singer using the pseudonym Truenorthstrong under which he chose to post defamatory comments about the plaintiffs on the internet.
[5] Prior to moving for judgment, the plaintiffs had obtained a Norwich order against the host of the website on which Mr. Singer posted his comments. The host provided information that allowed the plaintiffs to communicate with Mr. Singer. But not having Mr. Singer’s actual name, the plaintiffs sued him under his pseudonym.
[6] A Case Management Master made an order authorizing substitutional service on Mr. Singer at his email address.
[7] In light of the efforts made to find the defendants’ identities, I ruled as follows:
[24] In this case, each of the defaulting defendants was served at an email address provided by him or her to Stockhouse.com or through their website private messaging accounts on the Stockhouse.com site. I have no doubt that in authorizing this manner of service, the Master implicitly - if not explicitly - found that the statement of claim so served would likely come to the defaulting defendants’ attention. I agree and find that the service effected under Master Abram’s order was reasonably expected to bring the proceedings to the attention of the users who posted on the Theralase Bullboard under the pseudonyms listed in the title of proceedings and accordingly the court has jurisdiction over them in personam.
[8] I granted default judgment against Mr. Singer on the following basis:
[70] This defendant published five posts in July through September, 2015 that were read between 59 and 238 times. The defendant alleges that the company is operated as a “pump and dump” scheme for the benefit of the promoters.
[71] The posts are defamatory publications of and concerning Theralase. In the absence of a defence, Theralase is entitled to judgment against this defendant.
[72] These posts were pointedly aimed to warn investors away from investing in Theralase. They were intended to impair the company’s ability to raise capital while conducting its research and development activities. A “pump and dump” scheme is illegal. The allegation is serious and designed to be harmful. In my view an award of general damages of $35,000 is appropriate against this defendant in favour of Theralase.
The Reason for the Default
[9] Mr. Singer is a seasoned professional in the investment community. He is currently the Director of Relationship Management at Aviso Wealth. He has over 25 years experience in the financial services and investment management sectors. He completed the Canadian Securities Course in 1992.
[10] Mr. Singer testifies that he thought that the website where he posted his defamatory statements “was a place for investors to post freely about stocks purchased”. He does not indicate whether he thought himself free of the law of defamation. However, ignorance of the law would not avail him in any event.
[11] Mr. Singer says that he gave little thought to his defamatory postings:
- At the time I posted my comments on Stockhouse I believed them to be true, based on information I had received, read and heard. My comments were made without much thought, and in passing. I have no particular connection or issue with the plaintiffs. I was simply a passing investor in Theralase. As an investor, I only ever hoped for the stock to go up, not down. If I had known that my postings could have effected [sic] the stock price to my detriment, why would I make such postings? If I understood that my comments could truly effect [sic] the share price I would have been praising the shares non-stop.
[12] While Mr. Singer says that he thought his comments were true at the time, he does not continue to assert their truth today. Rather, he seems to assert a view that making thoughtless, untrue statements on a website in which corporate investors discuss the affairs of the company would be innocuous.
[13] The plaintiffs made multiple efforts to communicate with Mr. Singer leading up to the motion for default judgment. They all went unanswered.
[14] Mr. Singer admits to receiving the plaintiffs’ communications concerning these proceedings:
- I did receive correspondence on [sic] regarding this claim but, frankly, I did not actually believe it to be serious. I thought it was a scammer attempting to manipulate me and I quickly scanned and deleted all correspondence I received. I never read the material as I simply thought it was a scam. To the best of my recollection, I recall receiving a few e-mails that I quickly read but I did not understand that I was actually being sued.
[15] This evidence is internally inconsistent. Mr. Singer attests to both quickly reading and not reading the material sent to him. He decided that emails and letters from a known Toronto law firm enclosing court documents were a scam. He did not pick up a phone or send a single email to verify his view. He made a decision to ignore the lawsuit.
[16] When the plaintiffs obtained their judgment, they retained consultants to assist them to track the emails by which they sent the judgment to the defendants.
[17] Between February and August, 2020, the email sending the default judgment to Mr. Singer’s personal email account was opened 11 times.
[18] Mr. Singer does not mention opening the judgment 11 times himself or why he or anyone with access to his personal email would access a spam email 11 times over the course of several months. Rather, he says that he learned of the judgment as follows:
- Late last week when I received the e-mail dated November 18, 2020 (Exhibit "B") I was going to dispose of this e-mail as I did the others, thinking it was a scam, but in scanning the document I noted that there was reference to my place of employment. For this reason, late last week, I contacted a lawyer whose name I saw on e-mail correspondence in this matter, Mr. Simon Morris, who I now understand is representing the defendant Mr. Charles Latner. When I contacted Mr. Simon Morris I expressed my concern about how/why my place of employment was mentioned in the documents.
[19] I have reviewed Exhibit “B” attached to Mr. Singer’s affidavit and do not see any reference at all to Mr. Singer’s place of employment. Counsel for the plaintiffs challenged this assertion in argument and Mr. Morris offered no answer.
[20] There is no doubt however, that once Mr. Singer consulted Mr. Morris and learned that the judgment was real, he moved quickly to set it aside. By order dated November 30, 2020, I substituted the actual names of defendants in place of pseudonyms without prejudice to Mr. Singer’s right to challenge the default judgment.
[21] Assuming that Mr. Singer did not believe that he was being sued or that judgment had been granted against him, I do not know what more the plaintiffs could have done to convince him of the opposite. He received notice after notice that he skimmed at least and ignored. He or someone with access to his personal email reviewed the judgment 11 times including four times on August 9, 2020 alone. Yet, until he saw his employment mentioned in an email months later, (which cannot be seen in the email itself) he did nothing about it.
[22] Mr. Singer was content to ignore documents sent to him by email and that used his pseudonym because he did not believe they could be converted into a judgment. He makes this clear in para. 8 of his affidavit where he says:
I also did not understand or believe that I could be served by e-mail with something as significant as court proceedings. Finally, I did not believe or understand that a judgement against a username I used on-line could be converted into a judgement against me.
[23] Once again, Mr. Singer’s ignorance of the law is no excuse. But it is telling that a person who posts defamatory comments online under a pseudonym did not believe that he could be sued by online notice and in the pseudonym he chose. He apparently adverted to the question of whether the documents might be real and decided, without calling counsel, that he could not be sued that way. He only decided to call his lawyer when he saw that the plaintiffs were coming closer to finding his actual identity.
[24] In Sunlife Assurance Company of Canada v. Premier Financial Group Incorporated (Premier Financial), 2013 ONCA 151, the Court of Appeal held
It is established that a conscious decision not to participate in the proceedings bars consideration of a defence for the merits, even if one exists:
[25] On this basis alone, I would dismiss the motion.
Mr. Singer did not move Promptly
[26] As I noted above, Mr. Singer moved quickly in November once he saw that the plaintiffs knew who he was and that they had a valid judgment against him. But he had the judgment since February and it had been accessed multiple times. It was not deleted like spam. It weighed on him and yet he waited to let the plaintiffs actually find him. I find that he did not act as soon as the judgment came to his attention. Rather, he continued to defer acting on it until the plaintiffs got close to confirming his identity.
The Merits
[27] On the merits, Mr. Singer raises limitation defences that are weak at best. In view of the proven, substantial efforts of the plaintiffs to locate Mr. Singer, it is not open to him to conceal his identity and then argue that the plaintiffs ought to have found him sooner or sued him before it did. There is no obligation to sue a John Doe plaintiff.
[28] Mr. Singer then relies on the protections afforded to newspapers and broadcasters under ss. 5 and 6 of the Libel and Slander Act RSO 1990, c L.12. I am dubious, but do not need to decide, whether unmediated comments posted on an online chatline or bulletin board can amount to either a broadcast or a newspaper. In this format, there is no editorial involvement by a broadcaster or publisher. Regardless, under s. 8 of the statute, the statutory protections require that the name and address of the broadcaster or publisher be disclosed. Mr. Singer did not do that.
[29] Mr. Singer would also rely on the anti-SLAPP provisions of s. 137.1 of the Court of Justice Act, RSO 1990, c C.43. But, Mr. Singer has no defences available for his defamatory words. He points to an OSC finding to cast aspersions on the plaintiffs. But he cannot say that he was bringing an important matter to light at the same time as saying that he was making innocuous little comments, just in passing, not knowing what a “pump and dump” scheme was, and with no due diligence at all. He has ridden the wrong horse to cloak himself as a whistleblower.[^1]
[30] The arguments may not all be frivolous. But they are a long way from compelling.
Prejudice and the Interests of Justice
[31] The prejudice to the plaintiff of starting all over again after being put to the cost, effort, and delay of finding the anonymous defendants is both inordinate and, for the reasons discussed below, an affront to the court’s process and any conception of a just outcome.
[32] In my decision granting the original judgment, I quoted the words of Goldstein J. in Manson v John Doe, 2013 ONSC 628:
[t]here are few things more cowardly and insidious than an anonymous blogger who posts spiteful and defamatory comments about a reputable member of the public and then hides behind the electronic curtain provided by the Internet. The Defendant confuses freedom of speech with freedom of defamation. There are, undoubtedly, legitimate anonymous Internet posts: persons critical of autocratic or repressive regimes, for example, or legitimate whistleblowers. The Defendant is not one of those people. The law will afford his posts all the protection they deserve, which is to say none.
[33] Mr. Singer’s evidence shows why these words are so important. Mr. Singer is not a nerdy teenager sitting in his parents’ basement roll-playing as a self-aggrandized internet troll. He is a seasoned professional in the investment industry who says he believed that he was free to publish anonymous comments accusing people in the public markets of illegal conduct.
[34] That a seasoned investment industry professional thinks he can publish anonymous accusations of illegal conduct against management of a reporting issuer on an investors’ website without taking any care to ascertain the truth of his accusations and without any care about the damage that his words might cause in the market place shows the frightening potential for harm associated with anonymity on the internet. It can be safely assumed that Mr. Singer would not have made his defamatory posts if he had had to sign his name and identify his important position.
[35] Mr. Singer’s belief and feelings may have been drivers of his decision-making – especially whether to spend money to call a lawyer – but they are not a justification for defamatory conduct or for ignoring proceedings of which he had ample knowledge in ways found acceptable by both the Case Management Master and me. Allowing a person to dismiss a lawsuit as spam with no due diligence at all is an obviously unacceptable invitation to mischief.
[36] To allow Mr. Singer to re-open this case now, after the hoops he has forced the plaintiffs through would be an abuse of process. It would give power to the worst risks created by anonymous posters. Telling anonymous posters that they can ignore legal proceedings until the plaintiffs have spent years and tens of thousands of dollars to methodically unearth their hidden identities but then, once they are exposed, they get to undo all the steps taken while they were hiding, creates all the wrong incentives toward anonymous postings and ignoring proceedings.
[37] There is no doubt that the plaintiff gave Mr. Singer more than ample notice of this proceeding. Just as he did no due diligence before making his defamatory statements, he did no due diligence before deciding that the lawsuit was spam and could be ignored. But he did not ignore it. He came back to the judgment over and again. But he only came forward months later when he saw that he was found.
[38] In my view, the interests of justice weigh heavily against lifting the default judgment in this case.
Outcome
[39] The motion is dismissed.
[40] The plaintiffs may deliver cost submissions no later than February 12, 2021. The defendant may deliver cost submissions no later than February 19, 2021. Both parties shall deliver Costs Outlines. In addition, the parties may deliver copies of any offers to settle on which they rely. Submissions shall be no longer than three pages (not counting the Cost Outlines and offers to settle). All material is to be filed through the Civil Submissions Online portal and shall also be sent to me in searchable PDF format as an attachment to an email to my Judicial Assistant. No case law or statutory material is to be submitted. References to case law and statutory material, if any, shall be embedded in the parties’ submissions as hyperlinks.
F.L. Myers J.
Date: February 5, 2021
[^1]: It is not clear how he could have thought his comments were true and yet not known what they meant at the same time. But credibility is not the issue.